Cash Cannot Be Called Drug Money Without Evidence Linking It To Illicit Trafficking: Punjab & Haryana High Court Lashes Out At Misuse Of NDPS Section 27A To Deny Bail

“Section 27A is a scalpel, not a net — it targets organised financial enablers of drug crime, not petty possession with a thousand rupees”, Punjab & Haryana High Court, in a strongly reasoned decision by Justice Anoop Chitkara, reaffirming that Section 27A of the NDPS Act cannot be mechanically invoked merely because a small amount of cash is found with narcotics. The Court granted anticipatory and regular bail, respectively, to the petitioners Sukhchain Masih @ Lalla and Amit Sharma @ Veeru, observing that invocation of Section 27A without any concrete evidence of financing illicit trafficking is legally untenable and a violation of liberty.

"The law does not criminalise the mere possession of legal tender" – ₹1000 Found With Drugs Does Not Mean It Financed Drug Trafficking

Both cases involved recovery of small quantities of heroin (5 grams and 21 grams) and a meagre sum of ₹1000 in cash, which the police termed as "drug money", leading to invocation of Section 27A NDPS Act—a provision dealing with financing illicit traffic or harbouring drug offenders, which triggers the stringent bail embargo under Section 37.

The High Court sternly rejected this approach:

“The investigating officer did not utter a single reason, relying on which evidence, and on what basis, he declared the cash of ₹1000/- found besides drugs as ‘drug money’… simply because the accused also had cash along with the heroin, the investigator assumed the same to be drug money and further misinterpreted it as ‘financing illicit traffic’.”

Justice Chitkara held that such capricious invocation of Section 27A is legally impermissible, as it unwarrantedly triggers the twin bail conditions of Section 37, thereby seriously prejudicing the accused.

"Drug Money Is Not a Phrase in the NDPS Statute – It's a Prosecutorial Construct Without Legal Basis"

The Court emphasised that neither Section 27A nor Section 2(viiib) of the NDPS Act uses the term “drug money”. Refusing to judicially invent such a term, the Court observed:

“Before invoking §27A, one needs to show that the money was to be used to finance the illicit traffic of drugs. Even if, along with contraband, any money or sovereign metal, etc., is recovered, §27A does not permit an investigator to treat such money automatically as ‘financing illicit traffic’.”

The cash recovered, in both cases, was held to be lawful possession, unless the prosecution proved its derivation from illegal trafficking activities.

"Section 27A Targets Financial Sinews of Organised Drug Crime – Not Petty Possession or End Users"

Reiterating the legislative intent of Section 27A, the Court observed:

“Section 27A is a scalpel for the financial sinews of organised traffic, not a net for every case with cash near contraband... Judicial construction must suppress financiers/harbourers, not inflate liability onto end-users or casual sellers.”

The Court clarified that sustained, structural financing of drug networks is the core target of Section 27A, and not isolated, small-time possession or street-level interactions. Mere possession of ₹1000 alongside heroin cannot, by any stretch, be labelled as “financing illicit traffic”.

“Suspicion, However Strong, Cannot Substitute Evidence” – Burden Lies on Prosecution To Prove Illicit Derivation

In powerful language, the Court upheld the presumption of lawful possession of currency:

“Keeping money, issued by a Sovereign, can never be an offence unless a statute makes it so or the tender itself has expired.”

The judgment heavily relied on constitutional guarantees under Article 21, observing:

“When the possession of the legal tender is inherently lawful, any contrary presumption of culpability in respect of such money would offend Article 21 of the Constitution unless supported by a specific statutory basis or tangible evidence.”

The Court underscored that mere recovery of cash cannot shift the burden onto the accused, unless the State discharges its initial onus with substantive material.

“Drug Sale on Credit Is Not Financing Under Section 27A” – Kerala HC’s View Quoted With Approval

Quoting the Kerala High Court’s decision in K.K. Ashraf v. State, the Court clarified that “financing” is not mere sale, even if done on credit:

“The expression ‘financing’ involves an activity other than sale or purchase of the narcotic drug, in which a person invests or provides funds or resources for facilitating the activities...”

Thus, the sale or possession of contraband alone does not amount to financing, unless accompanied by concrete proof of a larger financial contribution to drug trafficking.

“Not Every Case Involving Drugs Justifies Bail Embargo – Judicial Scrutiny Mandatory Before Applying Section 37”

The Court noted with concern that Section 27A is frequently added by police to block bail, as it activates the twin conditions under Section 37, which make bail virtually impossible:

“This Court is lifting the veil to rule out the possibility of Section 27A being invoked capriciously to unwarrantedly trigger Section 37 with an ulterior motive to make bail difficult.”

Justice Chitkara reaffirmed that unless the prosecution lays foundational facts, the bail embargo under Section 37 NDPS Act cannot apply.

“When Section 27A of the NDPS Act has been invoked without any evidence of illicit financing or trafficking, the restrictions under Section 37 shall not apply, nor frustrate the rule of bail.”

Currency Is a Legal Tender, Not a Crime Tool – Cash Cannot Be Criminalised Without Law

In an elaborate discussion on what constitutes “money”, the Court referred to:

• The RBI Act, 1934

• Income Tax Act, particularly Section 269SS

• FEMA, 1999

• GST Act

• And even international definitions of money and currency

The Court held:

“Coins and paper currency are issued and guaranteed by the sovereign authority... the burden of proving their illicit derivation lies upon the investigating agency.”

Bail Granted, Section 27A Found Inapplicable

In conclusion, the Court allowed both petitions, making the interim bail orders absolute:

“The petitions are allowed... interim orders in both cases are made absolute. Pending applications, if any, stand disposed of.”

The judgment stands as a crucial precedent against the misuse of stringent provisions like Section 27A in routine NDPS cases, and an emphatic restoration of the balance between liberty and prosecution power.

Date of Decision: 14th November, 2025